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Rail Professional opinion
Katie Silvester, editor
Now for the bonus
question…
So the Network Rail board has bowed to pressure to waive its bonuses
– following the outcry over bankers’ bonuses and unfavourable press
coverage about its own bonuses – and the six executives have donated
the money to a safety fund instead (see page 6). It’s not the first time
that Network Rail executives’ bonuses have received media attention.
In fact it happens most years. The previous Network Rail CEO, Iain Coucher, waived part
of his bonus to avoid criticism 12 months ago. But this year’s bonuses got even more
widespread comment than in previous years, coming so soon after Network Rail’s
admission of guilt over the Elsenham level crossing deaths, and right on top of the furore
of the Royal Bank of Scotland’s bonuses, which RBS CEO Stephen Hester also turned
down in the face of strong public pressure.
Surely it must be time for a different approach. It just makes no sense to structure
a senior executive’s remuneration package as part salary and part bonus and then, each
year, when the bonus is due, make the executives in question feel so bad about taking
what they are entitled to that they feel obliged to turn it down. This is more or less what
the Conservatives did – transport secretary Justine Greening said very publicly that she
didn’t want to see the Network Rail board take up their bonuses, and that she would use
her vote as a Network Rail member to vote against the proposed bonuses.
But David Higgins – who, as CEO of Network Rail, was due the biggest bonus
and, therefore, came under most pressure to refuse it – was appointed to his post after
the coalition government came to power. So Greening is effectively saying: ‘OK, we
structured your remuneration package to be part salary and part bonus in the first place,
but we did so with the intention of pressurising you to turn down part of it each year, no
matter how good or bad performance was.’ The Elsenham level crossing tragedy, don’t
forget, happened years before David Higgins joined Network Rail, so he was in no way
personally culpable.
So why structure Network Rail’s executives’ remuneration packages in this way in
the first place When Network Rail was first incorporated, a bonus-style remuneration
system was written into its statues, as it was thought to be consistent with the civil
service where senior staff often receive bonuses, as well as echoing salary structures
popular in private sector engineering companies. But in recent years, and particularly
when the country is in recession, the public – fuelled by the press – has come to see senior
executives as greedy if they take their bonuses, particularly if they work in an industry
that receives public money.
So let’s avoid the annual witch hunt and restructure the Network Rail executives’
remuneration packages so that they do not include a bonus, just a straight salary. Of
course, many will still baulk at their salaries – David Higgins gets a salary of £560,000
before bonuses are even taken into account. He would have been due to receive up to
60 per cent of this again, as an annual bonus. The bonus structure also gives the board
long-term incentives, which, combined with the annual bonus, would have effectively let
Higgins double his salary over five years, if he received the full whack.
If Higgins got a salary of £1m a year, plenty would still think that
too high. Maybe there is a middle ground, but that should have been
squared before he started in his role, not publicly dissected every year
when the bonuses come around.
News in brief
Signalling apprentices
sought
Sims, a signalling specialist,
is searching for two new
apprentices in its bid to attract
young people to the industry. The
scheme will combine classroom
learning with on-the-job
mentoring. The closing date for
applicants is Saturday 31 March.
Olympic negotiations
continue
The RMT has rejected a £500
bonus for Tube workers during the
Olympics. However, the union and
TfL have reached an agreement
worth £2,500 for DLR staff
working through the Olympics
and Paralympics. That deal
comprises a £900 attendance
bonus, paid at £100 per week
over nine weeks for all grades.
Golfers invited to enter
charity tournament
Amateur golfers are being
sought for the Railway Benefit
Fund’s Annual Golf Day on
Thursday 7 June. Teams of four
rail industry golfers will compete
for the Barlow Cup at Hendon
Golf Club in north London,
paying £550 to enter. Contact
David Allen at
davidallen56bc@yahoo.co.uk
Conductors sacked
over passenger fight
The RMT in Scotland is
balloting for strike action over
the dismissal of two ticket
examiners. The union claims
the pair were defending
themselves from a gang which
had subjected them to violence
and intimidation over two
years. ScotRail has stood by
its decision to dismiss them for
gross misconduct.
Green vehicles get
parking discount
Drivers of low-emission
vehicles are paying reduced
parking charges in station car
parks following the launch
of a scheme by First Capital
Connect. Drivers are given a 10
per cent discount when they
purchase a season ticket with
RingGo, FCC’s mobile payment
system.
Page 4 March 2012